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2007-10-07 | Discussion Paper

Biofuels trade and sustainable development: The case of ecuador’s palm oil biodiesel

María Amparo Albán & Helena Cárdenas. (2007). Biofuels trade and sustainable development: The case of ecuador’s palm oil biodiesel. Working document. International Institute for Environment and Development.
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Global biofuels production is one of the topics that amply illustrates the complexity of harmonising the different variables of sustainable development. Pursuing environmental protection and implementing social standards, while assuring economic feasibility in industrial activities is vital for developing countries to compete in the global economy. Adding other elements such as food security risks and subsidies in the production of biofuels, as well as taking into account the vulnerability of commodity prices in the external market, can make the biofuels scenario even more complex, especially for developing countries interested in becoming major exporters of this new fuel to the international market.

These elements combine to challenge the strategic position of developing countries and their capacity to become real players in biofuels production worldwide, taking advantage of their privileged access to natural resources and their land availability for agricultural production.

Regardless of their natural capacities and the opportunities in the international and domestic market, developing countries in the region need to undertake a broad analysis when implementing biofuels production policies. They need to assess carefully the institutional capacities, the appropriate balance of development and the economic opportunities, in order to avoid solving one problem, while creating others, whose effects will be felt not only domestically but also globally.

The debate on the advantages and disadvantages of biofuels production began by questioning the conditions in which biofuels were being produced in some countries. Its effects on the environment and on worker rights, its economic impacts, as well as its possible threat to food security. Therefore it is important to provide decision makers, private and public actors with timely and comprehensive information on the different aspects of production, including trade and sustainable development in the policy discussion.

In the case of Ecuador, the palm oil industry took the lead in producing biodiesel for export. Production is still not very high, but shows potential for the development of a whole new industrial sector.

Palm oil production in Ecuador is currently enjoying a boom in terms of the international price of palm oil. This has led to a decrease in the interest of many local palm industries in the production of biodiesel.

With this background, the following study intends to offer an initial analysis of the production and trade of biodiesel in Ecuador in the light of its impacts on sustainable development, which we hope can make a contribution to policy makers and the private sector involved in this field.